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Redistribution in a model of voting and campaign contributions

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  • Campante, Filipe R.

Abstract

I propose a framework in which individual political participation can take two distinct forms, voting and contributing resources to campaigns, in a context in which the negligible impact of any individual's actions on aggregate outcomes is fully recognized by all agents. I then use the framework to reassess the relationship between inequality and redistribution. The model shows that, even though each contribution has a negligible impact, the interaction between contributions and voting leads to an endogenous wealth bias in the political process, as the advantage of wealthier individuals in providing contributions encourages parties to move their platforms closer to those individuals' preferred positions. This mechanism can in turn explain why the standard median-voter-based prediction, that more inequality produces more redistribution, has received little empirical support: higher inequality endogenously shifts the political system further in favor of the rich. In equilibrium, there is a non-monotonic relationship in which redistribution is initially increasing but eventually decreasing in inequality. I present some empirical evidence supporting the framework, using data on campaign contributions from US presidential elections. In particular, inequality increases contributions to Republicans, but not to Democrats, as predicted by the model.

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  • Campante, Filipe R., 2011. "Redistribution in a model of voting and campaign contributions," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 646-656, August.
  • Handle: RePEc:eee:pubeco:v:95:y:2011:i:7-8:p:646-656
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    Cited by:

    1. Hufe, Paul & Peichl, Andreas, 2016. "Beyond equal rights: Equality of opportunity in political participation," ZEW Discussion Papers 16-068, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    2. Jinhui H. Bai & Roger Lagunoff, 2011. "On the Faustian Dynamics of Policy and Political Power," Review of Economic Studies, Oxford University Press, vol. 78(1), pages 17-48.
    3. Großer, Jens & Reuben, Ernesto, 2013. "Redistribution and market efficiency: An experimental study," Journal of Public Economics, Elsevier, pages 39-52.
    4. Konstantinos Matakos & Dimitrios Xefteris, 2017. "Divide and rule: redistribution in a model with differentiated candidates," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 63(4), pages 867-902, April.
    5. Filipe Campante, "undated". "Redistribution in a Model of Voting and Campaign Contributions," Working Paper 248196, Harvard University OpenScholar.
    6. Gilles le Garrec, 2009. "Feeling guilty and redistributive politics," Documents de Travail de l'OFCE 2009-22, Observatoire Francais des Conjonctures Economiques (OFCE).
    7. Andrea Ichino & Loukas Karabarbounis & Enrico Moretti, 2011. "The Political Economy Of Intergenerational Income Mobility," Economic Inquiry, Western Economic Association International, vol. 49(1), pages 47-69, January.
    8. Gilles Le Garrec, 2014. "Fairness, socialization and the cultural deman for redistribution," Sciences Po publications 2014-20, Sciences Po.
    9. Le Garrec, Gilles, 2013. "Guilt aversion and redistributive politics: A moral intuitionist approach," Economics Discussion Papers 2013-53, Kiel Institute for the World Economy (IfW).
    10. Timothy Lambie-Hanson, 2013. "Campaign contributions as valence," Public Choice, Springer, vol. 157(1), pages 3-24, October.
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    12. Loukas Karabarbounis, 2011. "One Dollar, One Vote," Economic Journal, Royal Economic Society, vol. 121(553), pages 621-651, June.
    13. Campante, Filipe R., 2011. "Redistribution in a model of voting and campaign contributions," Journal of Public Economics, Elsevier, pages 646-656.
    14. Jinhui H. Bai & Roger Lagunoff, 2013. "Revealed Political Power," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54, pages 1085-1115, November.
    15. Großer, Jens & Reuben, Ernesto, 2013. "Redistribution and market efficiency: An experimental study," Journal of Public Economics, Elsevier, pages 39-52.
    16. Ruediger Bachmann & Jinhui Bai, 2013. "Politico-Economic Inequality and the Comovement of Government Purchases," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(4), pages 565-580, October.
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    18. Art Durnev & Ruben Enikolopov & Maria Petrova & Veronica Santarosa, 2012. "Politics, instability, and international investment flows," Working Papers w0190, Center for Economic and Financial Research (CEFIR).
    19. Gilles Le Garrec, 2011. "Redistribution and the cultural transmission of the taste for fairness," Documents de Travail de l'OFCE 2011-24, Observatoire Francais des Conjonctures Economiques (OFCE).
    20. Petrova, Maria, 2008. "Inequality and media capture," Journal of Public Economics, Elsevier, pages 183-212.
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    23. Gilles Le Garrec, 2009. "Feeling guilty and redistributive politics," Working Papers hal-01066215, HAL.
    24. Panova Elena, 2011. "Electoral Endorsements and Campaign Contributions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-25, February.
    25. Gilles Le Garrec, 2014. "Fairness, socialization and the cultural deman for redistribution," Documents de Travail de l'OFCE 2014-20, Observatoire Francais des Conjonctures Economiques (OFCE).

    More about this item

    Keywords

    Inequality Redistribution Political Participation Voting Elections Campaign Contributions Wealth Bias;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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